What is it about?
This paper aims at identifying Microfinance Institutions' deposit mobilization issues from the perspectives of the clients-the members of the MFIs. It looks into the different aspects of field level experience and practice of the NGO-MFIs working in Bangladesh. To identify the clients' perspective on deposit mobilization by MFIs, this paper presents findings from a study, which was conducted for Micro-credit Regulatory Authority and represents sample survey of 450 members of different NGO-MFIs working in the 4 divisions namely Dhaka, Chittagong, Rajshahi, and Khulna. A structured questionnaire was used to conduct the survey which was developed through literature review and finalized through pilot survey. Both descriptive and inferential statistics were used to analyze the data. Descriptive statistics such as tables, simple percentage, correlations etc. were used to describe the situation. Results show that MFIs are filling the gaps of the financial services required by vast majority of relatively poor people having no access to the banking system, and thus working as a complementary segment of overall financial system of the country with demands for more services to render. One of the major demands registered is the access to more flexible system of deposit by the rural people besides their demand for greater volume of credit flow, that still remain only partially fulfilled.
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Why is it important?
Deposit mobilization by Microfinance Institutions (MFIs) is crucial in Bangladesh as it enhances financial sustainability, expands lending capacity, and promotes financial inclusion. By collecting savings from rural and low-income populations, MFIs can reduce dependency on external funding and create a stable source of capital for microloans. This strengthens the financial ecosystem by encouraging a culture of savings among the unbanked, enabling households to manage risks, invest in income-generating activities, and improve their financial security. Additionally, mobilized deposits allow MFIs to offer more affordable credit, reducing borrowing costs for entrepreneurs, particularly rural women, and fostering long-term economic development. As Bangladesh continues to rely on microfinance for poverty alleviation, effective deposit mobilization ensures the resilience and sustainability of the sector while deepening financial access for marginalized communities.
Perspectives
Deposit mobilization by Microfinance Institutions (MFIs) is a key factor in strengthening Bangladesh’s financial inclusion and microfinance sector. By encouraging savings among low-income and rural populations, MFIs not only provide individuals with financial security but also create a self-sustaining funding mechanism for lending operations. This reduces reliance on external funding sources, making microfinance institutions more resilient and capable of offering lower-cost credit to borrowers. However, challenges such as regulatory constraints, limited financial literacy among depositors, and trust issues in informal financial institutions can hinder effective deposit mobilization. To maximize its impact, MFIs must adopt transparent policies, enhance financial literacy programs, and integrate digital banking solutions to encourage greater participation from rural communities.
Dr. Nazrul Islam
Independent University, Bangladesh
Read the Original
This page is a summary of: Deposit Mobilization by the MFIs:, DIU Journal of Business and Entrepreneurship, December 2010, Daffodil International University,
DOI: 10.36481/diujbe.v05i1-2.nye1jp36.
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